House Considering Bill to Ban Credit Checks on Employees and Applicants


The US House of Representatives is set to consider a bill known as the Equal Employment for All Act that will prohibit companies from using consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions. In other words, such information cannot be used for hiring, firing, promoting, or disciplining prospective and current employees. The bill comes on the heels of the EEOC’s focus on employers who use credit checks on employees and applicants.

Several companies have increased the use of consumer credit checks in recent years, in particular with employees who will handle finances. According to a 2012 Society for Human Resource Management survey, 87 percent of companies that perform credit background checks do so for positions with financial responsibilities.

The bills only bans companies from using the employee’s or applicant’s “creditworthiness, credit standing, or credit capacity” for employment purposes. This limitation is important because the Fair Credit Reporting Act covers much more than consumer credit information—the definition of investigative consumer report covers broad, general information about the consumer. The bill also provides exceptions for financial institutions, government employers, and employment that requires national security or FDIC clearance.

Many who follow the actions of Congress expect that this bill will not pass. However, the bill is further evidence of the federal government’s continued press to limit the information that companies can use when considering applicants for employment.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.


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